NEW YORK (AP) --The early history of real estate is filled with people planting flags or raising swords, moving in, and proclaiming ownership.

But many New Yorkers were surprised this summer when, under a controversial new city policy, a group of squatters took legal possession of several buildings in the high-rent Manhattan neighborhood where they had been living illegally for years, decades in some cases.

In August, the city sold 11 buildings on the Lower East Side for $1 each to a nonprofit agency, which will hand them over to the 236 squatters, including 36 children, who live in them.

"Responsibility -- that's what it feels like," said Baby Monroe, a subway musician who has lived in a dilapidated building at 155 Avenue C for the last few years, as he looked uneasily at a spray-painted anarchy symbol and a battered skull-and-crossbones flag hanging outside the building he will partly own.

Monroe and others are happy to remain in the neighborhood. Without this deal they would have been evicted, they believe.

Others think they've just pulled off a big con in a neighborhood where rents can run $2,000 a month.

"These are folks who just take whatever they want and don't give back," wrote Queens resident Sonora Chase in one of several angry letters to local papers. "I will work and follow the law for another 20 years to acquire what they have snagged illegally for $1 per building."

Carol Abrams of the New York City Department of Housing Preservation and Development said the arrangement was made possible because the city does not want to displace people while creating code compliant housing.

Also, the city preferred to have the squatters -- who will continue to live in the buildings while they are brought up to code -- inherit their seized homes rather than be shown the curb in a time of rising homelessness in New York City.

"This was a last resort," said Abrams. "But it's still a win-win. We can get 11 buildings up to code -- while creating affordable, low to moderate income housing."

The deal isn't costing the city a dime -- the Urban Homesteading Assistance Board, which arranged the ownership transfer, is negotiating capital improvement loans ranging from $200,000 to $600,000 per building from the Washington, D.C.-based National Cooperative Bank, so the buildings can be brought into compliance with city housing codes.

The loan will then be passed on to the one-time squatters, who will become owners of the cooperative housing. This also means the residents of each apartment will pay around $450 a month for years to come -- for many, the first time they've paid rent in years, though many have poured thousands of hours and dollars into making needed building repairs, such as pouring concrete staircases and patching floors and roofs.

To hedge costs, they can rent out the storefronts that several of the buildings have.

A lot has changed in the last seven years.

Over the July 4th weekend in 1995, the city sent storms of police in riot gear and an armored personnel carrier to the Lower East Side to execute eviction orders for many of the buildings where squatters lived.

After a siege and several arrests, the squatters countered in court that their presence was lawful. They argued they owned the abandoned buildings under the legal doctrine of adverse possession, having openly occupied them for more than 10 years.

Largely agreeing, a Manhattan judge barred the city from kicking many of the squatters out.

One of the buildings whose occupants were targeted for eviction was 21-23 Avenue C, called Umbrella House by its squatting founders, because of a roof leak that was once so bad an umbrella was needed indoors.

"I didn't feel like working 10 paying jobs to live in the neighborhood I love," said Linda Flores De Leon, 43, who has lived in the building on-and-off since 1989, with her now 12-year-old daughter.

De Leon, whose salary as a social worker would not pay typical rents in the area, wants to keep her daughter in the local public elementary school, a magnet school with an arts emphasis.

In just the last few years the neighborhood went from an open air drug market to a place where young bond traders and New York University students sip $5 lattes.

De Leon feels that because she and other family-oriented people believed in the neighborhood when everyone else was staying away, she has earned her apartment ownership.

Another resident of Umbrella House, Tauno Bilsted, 31, has spent the last 10 years doing electrical and plumbing work on the building, buying materials with money collected from all who live there.

He said, "I did not have the income to pay rent" when he moved in a decade ago.

Now, Umbrella House keeps a "sweat equity" log. Those who don't contribute to the renovation of the building are evicted by group vote, though it is not a legally enforceable eviction.

The conditions that led to New York City's squatter culture -- which provided the inspiration and the setting, a squat on the Lower East Side, for Jonathan Larsens hit Broadway musical "Rent" -- are not likely to reappear any time soon.

In the city's depressed real estate and economic climate of the 1970s and 1980s, many owners abandoned their buildings because it was cheaper than paying the taxes on them.

In 1987, there were 5,662 vacant buildings in the city. But in today's healthy real estate market, there are only 524.

By the late 1990s, the administration of Mayor Rudy Giuliani started to be receptive to a longstanding offer from the 30-year-old Urban Homesteading Assistance Board to simply turn over the buildings to the squatters.

But it was the current administration of Mayor Michael Bloomberg and the city council that ultimately approved the deal.

If they want to move out, the old squatters are not allowed to sell their apartments for more than $9,000 -- or $6,000 for smaller apartments -- for three years, with small increases after that. That way each building remains a low-income housing cooperative.

The transition of the squatters to homeowners is a new chapter in the old story of a particular brand of Lower East Side bohemianism.

In the 1970s and '80s, radicals, living in squats, closet-sized studios or tents in Tompkins Square Park, defined themselves by their rejection of the "system." Artists put up extravagant gargoyles on the buildings to scare away developers, and others squatted as a political statement, giving the community a stamp of personality recognized far beyond the city limits.

This deal preserves some of that spirit, said Joe Center, associate director of the Urban Homesteading Assistance Board.

"The Lower East Side has always been a place where people have moved to when coming to New York -- Jews, Irish, Italians, Puerto Ricans and now the young of all races and religions," said Center, whose own grandparents settled there. "That's a tradition worth preserving."